The Kapuni Gas Treatment Plant in Taranaki. Photo: RNZ / Robin Martin
Businesses relying on gas for manufacturing and processing are facing crisis with jobs, services and their future on the line, according to a survey.
The BusinessNZ Energy Council (BEC) and Optima say gas prices have more than doubled on average over the past five years, with about half of the 66 respondents having cut staff and costs, increased prices, and reduced production.
The manager of energy consultancy Optima, Martin Gummer, said the gas shortage was not all about big power companies.
"It's used in the creation of everyday products and services for New Zealanders. Things like coffee roasting, beer brewing, infant formula, meat and vegetable production harness natural gas as part of their process."
Eighty percent of the respondents have gas supply contracts that expire by 2027, exposing them to even higher prices as natural gas supply falls.
The shortage of gas has already led to fertiliser manufacturer Ballance to look at halting production after it was outbid for supply.
A meeting was held last week with Resources Minister Shane Jones although no hard and fast measures to improve supply appeared to have been reached.
Sector faces serious damage
BEC executive director Tina Schirr said unless action was taken the manufacturing sector would seriously suffer.
"If we do nothing, a major de-industrialisation crisis could escalate in the next two years, having serious and devastating consequences for suppliers and customers of gas-using businesses."
She said 40 percent of businesses might be able to switch to alternative fuels such as biomass, but an equal number said there were no commercially viable alternatives in the short term.
A move to biogas was possible, but there was a gap between demand and manufacturing it, with neither side prepared to commit financially, Schirr said.
To make progress the government should look to offer support for biogas manufacturing or helping businesses move direct to electricity, she said.
A fund offering such assistance - the Government Decarbonising Industry Fund (GIDI) - was axed by the government last year, after being criticised as corporate welfare.
Schirr said the country and businesses needed a bipartisan energy policy, which would give certainty to investors, allowing them to commit financial and physical resources to exploration and developing new gas fields.
"We urge the government to use all the levers at its disposal to help free up gas supplies and get more gas out of the ground. Increased investment in developing gas fields short-term is desperately needed to reduce the shortfall in supply."
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